It has been advised strongly never to store your primary data file on a shared folder or a network drive. The structure of the MD data file is a lot of small transaction files and they can get corrupted or out of sync on a network drive.
When you use syncing, all data on Dropbox is encrypted, only by knowing the syncing password can anyone gain access to the information. File permissions are not being used in Moneydance.
Seeing a "Restored account ..." is really just a surfacing of an inconsistency in the data that may have been there for quite some time and just not visible.
These accounts are generally caused by Moneydance encountering something that refers to a category or account that is no longer present. These references can be from a transaction, reminder, or sub-account. Because MD does not know the name of the category/account, it only has the ID number, it uses that to create the "Restored" accounts and uses this ID as part of the account name.
The number of subfolders under moneydancesync indicates the number of syncing data sets that have been created over time. The alphanumeric name of the folder is the internal unique ID of the data set.